Antitrust Law Daily Wrap Up, ANTITRUST—6th Cir.: Medical center denied appeal of class certification in conspiracy to suppress wages suit, (Feb 3, 2015)

By Greg Hammond, J.D.

VHS of Michigan, Inc., doing business as Detroit Medical Center (DMC), could not appeal an order granting class certification in area nurses’ antitrust claims that DMC conspired to suppress wages. In denying DMC’s petition for permission to appeal, the U.S. Court of Appeals in Cincinnati determined that DMC failed to demonstrate it was likely to succeed on appeal, and no other factor weighed in favor of an appeal (In re VHS of Michigan, Inc., February 3, 2015, Stranch, J.).

Two Detroit-area nurses filed suit against eight local hospitals, alleging a conspiracy to suppress wages in violation of the Sherman Act. Specifically, the nurses alleged that the hospitals: (1) conspired among themselves and with other local hospitals to hold down the wages of registered nurses employed at these hospitals (the “per se” claim); and (2) exchanged compensation-related information among themselves that reduced competition among Detroit-area hospitals in the wages paid to registered nurses (the “rule of reason” claim). DMC is the only hospital that has not settled the nurses’ claims.

The federal district court in Detroit granted summary judgment on the per se claim, and granted class certification for the rule of reason claim. In reconsidering its certification order in light of Comcast Corp. v. Behrend (133 S. Ct. 1426, 2013-1 Trade Cases ¶78,316), the court determined that Comcast did not call into question its prior decision, and consequently recertified the class and reinstated the prior certification opinion.

DMC petitioned for permission to appeal, arguing that the district court’s application of Comcast was an abuse of discretion. Specifically, DMC alleged that the nurses failed to show a link between their damages model and the rule of reason theory and that the damages from the two theories can be aggregated.

In determining whether a district court clearly abused its discretion in granting class certification, the appellate court considers four factors: (1) whether DMC is likely to succeed on appeal under the deferential abuse-of-discretion standard; (2) whether the cost of continuing the litigation for either party will hamper subsequent review; (3) whether the case presents a novel or unsettled question of law; and (4) the procedural posture of the case.

The appellate court rejected DMC’s arguments, finding that DMC failed to demonstrate a strong likelihood of success on appeal and that no other factor strongly favors permitting the appeal. Specifically, the court noted that Comcast applies where multiple theories of liability exist, those theories create separable anticompetitive effects, and the combined effects can result in aggregated damages. In this case, the district court correctly concluded that the two theories of anticompetitive conduct, the per se claim and the rule of reason claim, were mutually exclusive. Further, because the expert’s damages calculation applied to either theory of anticompetitive conduct, the district court appropriately determined that damages were not improperly aggregated. The aggregated-damages concern raised in Comcast was therefore inapplicable in the instant case, and the district court did not abuse its discretion in granting class certification.

The case number is 14-0107.

Attorneys: Thomas Henderson Dupree, Jr. (Gibson, Dunn & Crutcher) for VHS of Michigan, Inc. Mark Adam Griffin (Keller Rohrback) for Pat Cason-Merendo.

Companies: VHS of Michigan, Inc.

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